I hope this market update finds you well and your year is off to a great start. I have a feeling that 2026 is going to be an exceptional year. To me, it's clearly a "be better than the year before" kind of year, though I do fundamentally believe that should be every year. The way the excess and surplus (E&S) property market continues to operate will allow us all to chase down new opportunities with increased vigor and success.

When it comes to property insurance, if you're a little worried about the trajectory and acceleration of rate decline in this insurance cycle, just think about how many insurance cycles have come and gone since Lloyd's of London's beginnings in 1688 — and how those cycles continue to define our business. The first quarter of the year always brings some new energy, and 2026 is no exception.

A High-Level Look at 2026

As we shake off winter (or at least try to) and set sights on spring, the E&S market remains dynamic, with capacity in abundance, competition intensifying and underwriting discipline trying to hold strong in some cases and being thrown out the window in other cases. The steady drumbeat of new managing general agent (MGA) entrants and automated capacity continues and at the same time, carriers are increasingly worried about how the continued rate decline will impact margins, their ability to grow and maintain market share.

As an insurance buyer, 2026 is starting the same way 2025 left off. The rate decreases will likely throttle back as we get further into the year. Out the gate, buyers have all the power and have a plethora of options at their disposal to save money, improve terms and buy additional limits as needed to more effectively transfer their risk. Clients have started the year doing all of these things, and the savings on their property insurance programs is helping offset some of the increases they are seeing in their liability programs.

On the carrier side, it's kind of a "hang on" mentality right now with underwriters willing to do what is needed to retain business and maintain their participation on a deal. To underwriters, new business is like drinking from the fountain of youth and in high demand. One carrier's new business opportunity is another's renewal, however, and this behavior is keeping all underwriters on their toes and forcing them to be even more creative to work their way onto a deal or maintain an existing position.

Rates in a Competitive Market

We're only two months into the year and rates are already averaging down 12.5% to 20% deal by deal. In order to get creative, we've seen some programs secure two-year offerings and rate locks for future renewal cycles. I wouldn't say clients should expect this on every account, but it's clearly a sign that for the right insured, carriers are willing to be more creative and offer some additional long-term stability perks to be part of a placement they want to be on or maintain. The word "partnership" is everywhere, and clients will be spending a good amount of time in 2026 deciding what price they place on loyalty with their carriers. There will certainly be options to spend a bit more to stay with the same trading partners or to save a few dollars with a new capacity provider that might not necessarily offer the same long-term stability value proposition. It'll also be a time where premium savings will lag behind rate change because clients are spending money to retain less and buy more limit in addition to general portfolio growth.

Normally I'd break down rate change by asset class and geography, but the market has gotten so competitive — and January 1 reinsurance renewals for carriers were so successful — that the market is agnostic to geography and asset class. I can think of very few instances where capacity isn't in abundance and competition isn't driving the overall result a client sees.

The only real pain we see in the market is with clients that have outgrown the standard lines arena or are being non-renewed by standard lines package markets and then need to pursue an E&S option for the first time. While the E&S market has a competitive option for those clients, the discussion on perspective takes center stage. Many insureds aren't adequately prepared for the increased deductibles and higher rates that E&S markets use compared to those that generally bundle all the lines of coverage together to provide very basic and non-customizable insurance to buyers.

If I was really pressed to throw out a few channels that are not as competitive as the broader market, I'd say that wildfire and brush zone-exposed business is still not seeing the relief that many of these clients need or would like. This segment of the market is extremely challenging for standard markets and continues to be a major personal lines problem. Business is still leaving the standard arena, and while E&S carriers are driving rates down and offering significant reductions for the third year in a row, those rate levels are still unaffordable for many clients. Homeowners Associations have been hit the hardest, and right behind that are many private and charter schools as well as other non-profit organizations that provide resources to their communities and simply don't have the budget to take on the cost of the insurance they need or the deductible levels carriers require.

Heavy manufacturing, recyclers, lumber and other similar high-hazard occupancies are still seeing some challenges with more limited capacity and competition available to them. But unless these clients have suffered major claims, they're still seeing more stability year over year and more modest reductions.

Outside of brush and high-hazard business, 2026 will see carriers targeting the soft occupancy world (retail, hospitality, multi family, office, etc.) and being more aggressive in their approach to it. That competition will continue to drive rates down with ease. In terms of carrier behavior, many of the deals we've worked on in the first quarter have seen carriers quote below target pricing or well below market rate decrease averages just to try and leverage their way on a deal early and out the gate.

This, of course, sets the tone for the rest of the renewal cycle and allows brokers to focus on the perfect combination of maximizing rate decreases for clients while building much more robust coverage and reducing retentions to levels we haven't seen in the market for at least five years. As a carrier, I wouldn't run around thinking the sky is falling and we're crashing through the floor to some market depth we haven't seen before. I would, however, certainly think carriers should proceed with caution as the market environment continues to deteriorate from their vantage point. Carriers had just over five years of rate lift to get their books healthy again, and the way the market is going, if behaviors don't change or slow down, they may give up five years of ground in under 36 months.

In a nutshell, if you're a relatively loss-free client with a halfway decent loss ratio you should expect 12.5% down but could easily see 20%+. Larger accounts (by way of total insured value and overall premium spend) will mean increased carrier competition and the ability to see much larger rate decreases that will be consistently north of 17.5%. Mid-market business, which I would define as the under $750k in premium level and less than $500M in TIV, is likely to see rate decrease levels average 10% to 15% for the first half of the year. Some of the smaller middle-market E&S businesses are likely to average a lot closer to 5% to 7.5% down just because there is not enough premium for carriers to offer more, nor would it make sense to do so. The small middle-market accounts also will run into carrier minimum premium levels, which means many of them could see flat renewals year over year.

We're still seeing some significant loss-impacted accounts see slight increases and flat renewals. We're also seeing some clients chug along with increased premium spend year-over-year as their portfolios grow and they buy larger limits, lower retentions or look to spend savings on coverage enhancements they know they will need for the next big CAT event. As such, it's still a time where brokers and carriers can grow and trade effectively if they strategically align themselves with clients who value partnership and are in growth mode.

I have mentioned this before in previous updates and will reiterate here: There is still a level of fragility in the market that we all need to keep an eye on as 2026 unfolds. Carriers have wanted to hold onto deductibles and some of their more restrictive terms and conditions such as non damage business interruption coverages, landscaping, freeze and water damage protections, wind and hail retentions, etc. So far to start 2026, carriers seem more than willing to cough up rate and terms and conditions, and this is when things can change quickly and abruptly for carriers.

While the current carrier behavior is good for clients, if combined ratios get less healthy and attritional losses continue to rise, then we're only a major storm or a series of mid to larger CAT events away from market volatility swinging the other way. While we all know it's not realistic, many savvy risk managers would happily trade a decade of flat renewals and stable terms and conditions for zero volatility and market swings. It sounds nice in theory, but would defy the basic philosophy of supply and demand economics.

Looking Ahead

As we look ahead for the rest of 2026, we should all simply buckle up and enjoy the ride. We must keep perspective, and the outcomes we are going to see are already laid out ahead of us because we know the environment we'll be trading in won't change overnight. According to Gallagher Re, the North American Property market recorded $105B in insured losses in 2025 (including at least $100B alone in the United States), and those claims have given way to a third straight year of double-digit rate reductions here in 2026. In 2024 and 2023, the North American market registered insured losses of $137B and $98B in today's dollars, respectively (US-only losses were $130B in 2024 and $92B in 2023 in today's dollars). Sum that up, and by the time 2026 ends, you'll likely have three straight years of rate levels dropping close to 50% from their peak in 2023 while losses likely average just shy of a half of a trillion dollars (if you project 2026 similar to 2025).

That seems like a lot of losses to give back 50% of your rate base. If we all agree that insurance has more formally been around since the 1600s, I can't even begin to fathom how many market cycles we have seen or have yet to see — but I do know that they wouldn't call them cycles if they didn't come and go.

The plethora of supply in capacity and lack of meaningful investments returns in other areas of the economy continue to make the CAT loss trade look attractive to investors. If you trend the data, as rates drop you won't need as many global insured losses as before to move the market. Though in my view, the market won't change unless the loss figures trend well north of $150B annually because the $100B to $130B level has only yielded further rate decline.

The best brokers and insureds still know how to optimize results in any cycle and use their experience and their relationships to maintain key long-term partnerships that offer them best in class coverage at the best available pricing. I do believe what we do (carriers, brokers, insurance buyers) helps keep the world moving and protect businesses when they need it most. But at the core, all we can really do is get our clients the best available result the market will bear and advise clients of the pros and cons of various options available to them. We help keep business running, and when something goes wrong, our goal is to make sure the insurance contracts get them back up and running as fast as possible.

Risk Placement Services is full of talented people who take that philosophy to heart and we appreciate the partnership we have with our carriers and our clients. The trust we create between the two hopefully leaves everyone thinking they got a fair result and they look forward to trading at the next renewal date, regardless of what market cycle conditions we experience at that time.

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